For months, the Consumer Financial Protection Bureau (CFPB) has been at the center of a battle that some have called a “Rome-versus-Avignon power struggle” — but most Americans aren’t really paying attention. Simply put, the CFPB stops financial businesses from harassing and defrauding people. The agency is virtually the only major accountability-oriented reform to emerge in response to the 2008 economic collapse, and its demise would leave millions of people largely defenseless against predatory financial corporations.
A cursory look at the CFPB database demonstrates why it exists. The agency’s website features over a million complaints from people reporting that they’re being scammed and intimidated, often by third-party debt collectors. Complainants report being harassed over debts, including ones that don’t belong to them or have already been discharged. Collectors call debtors’ employers and family members, dangling personal information and threatening to take legal action or ruin the target’s credit score if they don’t pay a fee.
The CFPB’s job is to investigate these claims and bring these corporations to heel. Those who submit complaints are lucky to be aware they have recourse; many in similar situations pay the fees, however illegitimate, just to get financial companies off their backs.
The CFPB has accomplished a lot in its young life. It was created in 2011 as part of the Dodd-Frank legislation that was supposed to break the finance sector’s most harmful habits. From the start, the agency has had die-hard enemies in the GOP: Paul Ryan disparaged it as an “unchecked, unconstitutional, and unaccountable” example of federal overreach. But it’s been successful in shielding consumers from abusive practices by banks, lenders, and collectors — as well as playing Robin Hood by taking from wealthy corporations to give to the average misled financial consumer.
In less than six years the CFPB extracted $12 billion from corporations and returned it to a total of 29 million defrauded Americans. Most of that money was paid in large sums, as in 2015 when the agency forced two debt-buying companies — Encore Capital Group and Portfolio Recovery Associates — to pay $79 million in refunds and penalties to tens of thousands of people the companies had fleeced. The CFPB has also engaged in policymaking, issuing new rules for home-mortgage lenders in 2013 that took aim at banks’ pattern of intentionally lending money they know borrowers can’t repay, at high interest rates. In 2016, the agency also instituted new guidelines for payday lenders in an attempt to stop loan sharks from targeting desperate people boxed out of traditional financial services due to debt and bad credit.
The agency’s good work has persisted into the Trump era: last year, the CFPB took action against Citibank for systematically preying on student-loan borrowers. One debt settlement company, Morgan Drexen, was fined so steeply for its infractions against consumers that the company declared bankruptcy.
Fox in the Henhouse
But now the agency’s ambitious pursuit of corporate accountability has sputtered to a standstill. Earlier this year, it dropped a major lawsuit against the very payday lenders it vowed to rein in.
The decision to drop the lawsuit came from Mick Mulvaney, the agency’s Trump-appointed acting director, prompting consumer advocates to ask, “Whose side is Mulvaney on, that of lenders charging 300 percent to 950 percent interest or American families exploited by predatory lenders?” The question was rhetorical — Mulvaney has gone on record calling the CFPB a “sick, sad joke” and suggesting it be eliminated entirely. Mulvaney is to the CFPB as Scott Pruitt is to the EPA: a soldier behind enemy lines, a fox in the henhouse.
Mulvaney arrived on the scene after the departure of his predecessor, Richard Cordray, creating an opportunity for the Trump administration to reshape the agency. Cordray had pursued corporate accountability with fervor, and Mulvaney was openly brought in make the CFPB more finance-friendly. To some, Cordray “was a champion of the public, fighting predatory companies and abusive practices that rip off ordinary people,” remarked the New York Times. But to many Republicans “he embodied the kind of overaggressive policing that they contend hamstrings businesses and quashes innovation.” Mulvaney himself dismissed Cordray as someone who “viewed the bureau as an agency of ‘good guys’ fighting ‘bad guys.” In Mulvaney’s view, there apparently are no good guys and bad guys. The goal is compromise — which, given the purpose of the CFPB, translates to leniency.
Mulvaney has settled nicely into his new role as destroyer from within, requesting an agency budget of zero dollars and, as of this week, urging Congress to hobble the CFPB. “The bureau is far too powerful, and with precious little oversight of its activities,” he told lawmakers as he pleaded with them to gut the federal entity tasked with protecting ordinary people from usury and fraud.
Mick Mulvaney’s crusade against the agency he’s been tasked to lead has taken place against a backdrop of Trump administration palace intrigue. The media has focused on the details of Mulvaney’s rise, particularly the legal legitimacy of his appointment, which has been formally challenged by Cordray’s second in command, Leandra English. But in its haste to document the twists and turns of the DC legal battle, reporters have tended to miss something important: why anyone should care.
The economic crisis was precipitated by abusive financial-sector practices, and the bailout of the banks was one of the biggest heists in the nation’s history. The CFPB was just about the only good thing to come out of the collapse, a rare sign that some in the US government were committed to some measure of financial-sector accountability. The sacking of the agency is a naked admission that under our existing political setup the capitalist class can never suffer any consequences, no matter how badly it screws up.
On a more practical level, the CFPB is needed to protect people from corporate thuggery. We live in a world characterized by hyper-predation, a society in which schemes to wring profit from ordinary people grow ever more elaborate as technologies evolve and financialization reshapes the economy. Stagnating wages, rising living costs, skyrocketing debt, and diminishing labor protections mean that more and more people are living on the edge. And at the same time, financial institutions are developing increasingly clever ways to take advantage of desperation and confusion, pushing people into poverty and limiting their life options for a quick buck.
Having a public agency that can intervene in this state of affairs is essential, a tiny step toward a democratic government that elevates human lives over profit. We’re on the brink of losing one of our few weapons in the struggle against financial domination of the working class.